EUR/USD Forecast Might 18-22 – Buyers Eye European PMIs, Shopper Inflation


    Eurozone industrial manufacturing plunged by 11.three% in March, as manufacturing as been hit onerous by the Corvid-19 pandemic. German CPI accelerated to Zero.four% in April, up from Zero.1% a month earlier. Germany’s economic system contracted by 2.2% in This autumn, after a lack of Zero.1% in Q3. Within the eurozone, second-estimate GDP declined by three.eight%, confirming the preliminary learn.

    Within the U.S., inflation tanked in April, because the economic system continues to buckle beneath the burden of the Corvid-19 pandemic. CPI declined by Zero.eight%, down from -Zero.four% a month earlier. The core learn fell by Zero.four%, down from -Zero.1% within the earlier launch. Each figures missed their estimates. Unemployment claims proceed to fall and dropped under three million final week, with a launch of two.98 million. Nonetheless, this missed the estimate of two.5 million. Retail gross sales have been a catastrophe in April – the headline determine fell by 16.four%, whereas the core learn declined by 17.2 p.c. Analysts had projected declines of -12.Zero% for the headline and 16.four% for the core releases.

    EUR/USD every day chart with assist and resistance strains on it. Click on to enlarge:

    German ZEW Financial Sentiment: Wednesday, 9:00. After a dismal studying of -49.5 in March, the indicator rebounded sharply and soared to 28.2 factors. The April estimate stands at 30.Zero. It was an analogous story for the all-eurozone indicator, which jumped to 25.2, crushing the estimate of -38.2 factors. The April forecast stands at 27.four factors.
    Eurozone Present Account: Wednesday, eight:00. The eurozone continues to put up giant present account surpluses. The excess widened to EUR 40.2 billion, up from EUR 34.7 billion a month earlier. This determine was the biggest surplus in additional than 11 years. Will the upward development proceed?
    Eurozone Inflation: Wednesday, 9:00. Inflation has fallen sharply because the eurozone economic system has been paralyzed by the Covid-19 outbreak. The preliminary April learn fell to Zero.four%, and the ultimate studying is predicted to substantiate this determine.
    Eurozone Confidence: Wednesday, 14:00. Shoppers are deeply pessimistic about financial circumstances, and the indicator slumped to -23 in March, down from -12 a month earlier. This marked the bottom studying since 2013. The April estimate stands at -23 factors.
    Eurozone PMIs: Friday, 7:15 in France, 7:30 in Germany, and eight:00 for the entire eurozone. The providers sector has been in free-fall, with sharp contractions reported throughout the eurozone in April. The German PMI got here in at 16.2, the eurozone launch was 12.Zero, and the French studying stood at 10.2. The preliminary estimates for Might are 26.2 for Germany, 23.9 for the eurozone and 28.eight for France. The manufacturing sector is in higher form, however nonetheless exhibiting contraction, with readings effectively under the 50-level, which separates contraction from enlargement. The German PMI got here in at 34.5, the eurozone at 33.four and the French launch at 31.5. The forecast for the preliminary reads for Might are 39.Zero for Germany, 38.Zero for the eurozone and 35.6 for France.

    EUR/USD Technical evaluation

    Technical strains from high to backside:

    We begin with resistance at 1.1215, which has held since mid-January. 1.1119 is subsequent.

    1.1025 (talked about final week) has held in resistance since early April.

    The spherical variety of 1.0900 follows.

    1.0829 is a direct resistance line.

    The spherical variety of 1.07 is offering assist. This line noticed motion in mid-March, when EUR/USD confirmed robust volatility.

    1.0620 is defending the 1.06 stage.

    1.05 is the ultimate assist stage for now.

    I stay bearish on EUR/USD

    German and eurozone GDP numbers have been tender, reflecting deteriorating circumstances throughout the eurozone because of the Covid-19 outbreak. Buyers are effectively conscious of the troublesome scenario in Europe, and if this week’s numbers are weaker than projected, the euro might head decrease.

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